Steven M. Gallagher became known on the Internet as a successful stock trader with an uncanny ability to spot winning investments before the rest of the market caught on. On Twitter, he was known as “ Alex DeLarge ; ” on StockTwits, he was “ Alexander Delarge 655321 ” and had tens of thousands of followers who hung on his every call. To many retail investors, his posts seemed to come from a seasoned trader giving away profitable ideas for free. Federal prosecutors and securities regulators said the public face masked a far different reality: a carefully orchestrated pump-and-dump scheme that allowed Gallagher to profit while his followers were left holding rapidly declining stocks.
Gallagher’s case has become one of the most closely watched examples of how social media can be weaponized to manipulate markets. Long before meme stocks and online investing communities went mainstream, regulators had been warning about influential online personalities using their credibility to move stock prices for their own gain. Gallagher did just that, as charged by the U.S. Securities and Exchange Commission and U.S. Department of Justice.
Gallagher, a stock trader based in Ohio, built up a large following over the years by posting trading ideas, market commentary and investment opinions on social media platforms. His recommendations were often in relatively thinly traded small-cap stocks where even modest buying pressure could move prices up. His online following grew into the tens of thousands as did his ability to influence trading activity. The SEC said Gallagher’s strategy “followed a remarkably consistent pattern.” He accumulated shares behind the scenes for his own account before publicly recommending a stock. Then, when he had built up a position, he would issue bullish messages urging his followers to buy that same stock. He had a large audience, which would often respond by buying shares almost immediately after his posts came out, driving prices higher. But regulators said that rather than keep the investments with his followers, Gallagher frequently sold his shares into that surge in demand, cashing in while investors who bought following his recommendations were left holding the bag when prices later dropped.
The scheme was repeated between about 2019 and 2020 and involved many securities, the federal authorities said. Investigators said Gallagher “leveraged the trust he developed with his audience to generate hundreds of thousands of dollars in illicit profits.” The SEC charged that he violated antifraud provisions of the federal securities laws and engaged in manipulative trading practices designed to mislead investors as to his true intentions.
The picture painted by the government’s evidence was a far cry from Gallagher’s public persona. Prosecutors said he was already plotting his exit before many of his followers even entered the trade, while all the while painting himself as someone who was identifying promising opportunities for others. The investors believed they were dealing with a successful trader. Instead, many were inadvertently providing the buying pressure that Gallagher needed to sell at inflated prices, the government said.
The allegations ultimately led to parallel civil and criminal proceedings. In October 2021, the SEC filed a civil enforcement action against Gallagher in federal court in Manhattan, charging securities fraud and market manipulation. At roughly the same time, the Southern District of New York federal prosecutors unsealed criminal charges that described essentially the same conduct. Gallagher, unlike many high profile securities fraud cases which go to lengthy criminal trials, settled the criminal charges by way of a guilty plea. He pleaded guilty in federal court in January 2022 to committing securities fraud. The plea marked a crucial turning point, as it acknowledged criminal responsibility for actions that prosecutors alleged defrauded investors and manipulated market activity. Gallagher pleaded guilty to being part of a scheme to defraud by providing misleading stock recommendations that allowed him to profit at the expense of his followers, the Department of Justice said.
The SEC’s civil enforcement case continued even after the guilty plea. Civil actions typically seek remedies other than criminal penalties, such as monetary penalties, disgorgement of ill-gotten gains, injunctions against future violations and restrictions on involvement in securities markets. Gallagher disputed some of the SEC’s allegations, which led to years of wrangling before the case eventually went to a jury.
That trial ended in September 2025 with a federal jury finding Gallagher liable for securities fraud and manipulative trading. The ruling was a big win for the SEC and reinforced the agency’s stance that social media influence doesn’t give market participants a pass from long-standing securities laws. “The outcome of this case shows that those who secretly profit while advising others to buy securities will be held accountable under federal law,” SEC officials said after the verdict. Court filings say voluminous evidence was involved in the lawsuit, including Gallagher’s trading records, social media activity and communications related to the stock promotions. Regulators said the records showed a pattern of buying before the promotional posts and selling soon after the prices rose. Gallagher’s defense disputed certain aspects of the government’s interpretation of the evidence in the civil proceedings, but the jury ruled in favor of the SEC.
It also demonstrated how relatively small stocks can be particularly vulnerable to manipulation. Large public companies need much larger volumes to move prices, making manipulation that much harder. But smaller companies don’t often have much day-to-day trading. In such a situation, if you have a popular social media account and thousands of followers responding to it, you can create enough demand to move prices dramatically within minutes. Regulators have repeatedly cautioned investors to exercise caution when making investment decisions based solely on recommendations from online personalities whose financial interests may not be fully disclosed.
The investigation of Gallagher took place at a time when retail investing and social media were becoming more and more intertwined. Social media sites such as Twitter, StockTwits, Reddit and Discord changed the way investment ideas are shared, enabling influential traders to reach huge numbers of people instantaneously. The SEC has repeatedly warned that secretly buying shares before recommending them and then selling into the price increase that results is illegal market manipulation if investors are deceived about the promoter’s intentions. While many online commenters are sharing opinions legally,
Gallagher’s public record shows he operated primarily out of Ohio as he built his online presence. Other than the criminal conviction and civil enforcement action, there is no public record of separate fraud cases, or other criminal prosecutions unrelated to the conduct alleged by federal authorities in this matter.
Substantially, the Justice Department filed criminal securities fraud charges based on the same underlying conduct as the SEC’s enforcement action, which was based on his trading and online stock promotions. The criminal case ended with Gallagher’s guilty plea, but the broader legal fallout went far beyond the admission itself. The SEC sought permanent injunctive relief, disgorgement of the alleged ill-gotten gains, civil monetary penalties and other relief to protect investors and deter similar conduct. The jury’s finding of liability greatly bolstered the agency’s efforts to obtain those remedies through the federal court process.
The case is a reminder to the everyday investor that social media popularity does not equate to credibility or trustworthiness. Big followings, screenshots of profitable trades and confident predictions can give a sense of expertise but they don’t show if the person recommending has already positioned themselves to profit from the audience’s reaction. Securities laws are grounded in the principle that, at the time of their investment decision, investors are entitled to truthful disclosures about conflicts of interest.
The Gallagher case, at its heart, is about more than just the fall of one Internet stock promoter. It reflects regulators’ growing determination to apply decades-old securities laws to the modern ways of communicating, where one social media account can affect thousands of investors in seconds. As the rise of investing has coincided with the rise of digital platforms, the message from federal authorities has been clear: Online influence does not place anyone above the law, and leveraging that influence to secretly profit at the expense of followers can carry criminal and civil consequences that can last for years.
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